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Wealth in Your Pocket: The Rise of Microinvesting

There was a time when investing was the preserve of those with wads of cash to set aside. And there was a time when anyone with a stable job would save their hard-earned cash for a rainy day. But now that people are saving less than ever before, microinvestments are becoming the perfect answer for those with less disposable income. 

In the UK, microinvesting in funds has been around for more than four years, but in individual shares, it’s only been around the UK for two or three years.

However, says Jon Steinberg, co-founder Mountside Ventures, “It’s a prominent segment of the wealth and investment market as it’s a mass-market, catering to those who are time-poor, with fewer savings.” Microinvesting enables consumers to diversify more easily, therefore spreading any risk involved.

Steinberg says he’s seen consumer interest in the microinvesting sector rise in the last few years. “Microinvestment apps are at the heart of this trend – according to a recent Adjust report, investing app installs were up over 60% in the UK compared to the previous year, a significant rise.”

You might think you’d need to have serious dollar bills at the ready to get gold bars delivered to your front door but that’s not the case. Minted, an investment platform which allows individuals to buy and sell gold bullion, was created just last year when Hamzah Almasyabi and his co-founders noticed a sharp increase in demand for safe investments. The gold itself comes straight from the Nadir Metal Refinery, one of the largest refineries in Europe, and offers customers to both invest from just £30 a month or buy gold in lump sums with free storage and insurance. 

Previously, only the extremely wealthy could afford the costs involved with buying and selling gold bullion. But Almasyabi believes that is no longer the case. He said, “Affordable microinvesting and, especially in something like gold, is especially relevant right now.

“Uncertainty is the buzzword of the hour. We’re living in extremely uncertain times and global economies are reeling at the moment due to the effects of the Covid-19 pandemic. People are looking to minimise the risk to their savings or to losses in the stock markets and are looking for more stable ways of investing that can provide a safe haven.”

Gold seems to be the ultimate safe haven. While gold prices can fluctuate, the general medium-to-longer-term trend with gold prices is an upwards trajectory, says Almasyabi, “Physical gold has intrinsic value in its own right. No matter how the markets fare and how much prices fluctuate, an ounce of gold will always remain an ounce of gold that you own. People like that security and peace of mind.”

Additionally, gold usually does well in times of uncertainty, which naturally attracts investors. “Unlike assets such as property, gold can be liquidated quickly for cash if needed,” says Almasyabi.

As more fintech companies and digital platforms offer gold as a product that customers can manage digitally from their smartphones, market reporters and commodities analysts are all expecting gold to hit new heights in 2021.

Sustainability and tech are also popular among microinvesters. “We’ve seen from Wombat analytics that top-trending funds are the ‘The Techie’ and ‘The Green Machine’. This means that firstly, their millennial user base is investing in tech, mostly because they are familiar with the brands and are consumers themselves. Secondly, Wombat is seeing people move towards impact investing and investing in what matters to them.”

Fractional shares have made investing more accessible and enabled even more customers to share the success of some of the winning 2020 brands. We’re foreseeing that micro-investing has a very promising future,” Steinberg says, “as it helps break down previous barriers of investing and appeals to the next generation of investors.”

Covid-19 has disrupted every industry and the consumer investing scene is no different. Says Steinberg, “From speaking to our fintech clients, Wombat included, we know that because of the pandemic more people understand they need savings and a rainy-day fund. A segment of the population who are now working from home, and therefore not spending money on their commute, their lunch, and after-work drinks, are able to put these funds elsewhere. With the realisation that savings interest rates are fairly non-existent, this generation is wanting to make their money work harder for them.”

With the extra time some people have gained during coronavirus, they’re wanting to build better habits whether that’s eating, sleeping, fitness – building better financial habits comes into it too. “The search term ‘how to invest’ is twice as popular compared to this time last year, based on Google web searches,” says Steinberg. Microinvestments seem to pose the perfect solution. 

Author

  • Hazel Davis is a freelance writer based in West Yorkshire. She writes on a wide range of subjects, from music to fintech, for the Guardian, Telegraph, Financial Times, Times, Currency.com, Capital.com and Euromoney.

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